Major telcos said they can't provide E-rate discounts and may exit the program unless fixes are made to the E-rate Productivity Center (EPC), an online portal of the Universal Service Administrative Co. "While USAC released several waves of Funding Decision Commitment Letters (FCDL) to date, approving approximately $77.8 million in E-rate funds, these commitments are of little value to applicants unless service providers can access information regarding their customer’s E-rate funding status -- information essential to deliver service and provide the discounts USAC has authorized," said a letter Wednesday from AT&T, CenturyLink, Frontier Communications, Sprint, Verizon and Windstream to USAC CEO Christopher Henderson in FCC docket 13-184. The letter followed up on an attached April 20 letter previously not released.
Crocker Telecommunications asked the FCC to revisit Connect America Fund auction plans. Crocker, headquartered in Greenfield, Massachusetts, said the CAF Phase II auction funds should be sufficient to bring fiber-based advanced services to unserved areas. "We strongly urge the Commission to adopt rules for the CAF PH II auction that will allow for the deployment of the most robust and future proof physical infrastructure possible, recognizing that the infrastructure enabled by the USF support funds should be capable of delivering both broadband and voice services, and be capable of scaling in speed and performance for decades to come," it said in a petition posted Tuesday in docket 10-90. It asked the commission to clarify or reconsider decisions and proposals on scoring and weighting of bids, validating locations, letters of credit and accelerated payments in a May order and Further NPRM (see 1605250046 and 1605260034). Comments are due Thursday.
The uncertain timing of a federal USF contribution overhaul stirred debate over whether states should proceed with changes to their own funds. In replies Friday at the Nebraska Public Service Commission, some telecom companies urged the PSC to wait to revamp its surcharge methodology until the FCC Federal State Joint Board on Universal Service and the FCC act on federal contribution reform. It’s unclear when the Joint Board will issue a recommendation; the FCC USF contribution reform proceeding has been open for more than a decade.
With its universal service fund quickly depleting, the Utah Public Service Commission tentatively decided to increase its USF surcharge to 1.65 percent from 1 percent of billed intrastate retail rates, said a notice in Friday's Utah State Bulletin. The rule change may become effective Aug. 22, though the PSC could change its decision after comments are filed Aug. 15. If no change is made, the rate would increase Oct. 1, the Bulletin said. The new rate is “intended to function as an interim solution to address the current funding deficiency in the least disruptive way possible, and to allow time for the Utah Legislature to consider other changes to the fund,” it said. The Utah Division of Public Utilities last month urged a revamp of the state USF contribution method, saying without a change, the fund balance could dip $3 million this year and run out completely by early 2017 (see 1606210035). The DPU had recommended moving to a charge of 32 cents per line. But a Legislature committee “expressed interested in more fundamental changes to the Utah Universal Service Fund,” the State Bulletin said. Revenue from contributions to state USFs has declined in multiple jurisdictions, our survey has found (see 1607010010).
The FCC Enforcement Bureau and Blue Jay Wireless settled an investigation into whether the company improperly enrolled Hawaii customers into enhanced tribal support options under the USF Lifeline low-income program. Under an order approving a consent decree, Blue Jay will reimburse USF about $2 million and undertake compliance measures, said an agency release Friday. "This settlement makes clear that no Lifeline provider should turn a blind eye to potential fraud on the program," said Enforcement Bureau Chief Travis LeBlanc. The bureau found the company incorrectly requested and received the extra tribal funding (up to $25 extra per subscriber monthly) for consumers not residing in the Hawaiian Home Lands, the release said. Despite being informed in 2014 by Hawaii state regulators that the number of tribal subscribers it was claiming appeared to exceed the number of households in the Hawaiian Home Lands, Blue Jay continued to seek tribal support while it gathered more information, it added. The consent decree said Blue Jay admitted that from May to August 2014, it certified that it obtained tribal certifications from some subscribers who were later determined by Blue Jay to be nonresidents of the Hawaiian Home Lands. Commissioner Ajit Pai said the settlement confirms Lifeline still contains waste, fraud and abuse: "I can confirm that Blue Jay Wireless is one target of my ongoing investigation and that I flagged further suspicious conduct for the Enforcement Bureau’s investigation earlier this year. I will continue to work with my colleagues, the Enforcement Bureau, the Inspector General, and the Universal Service Administrative Company to end the abuse of taxpayer money by unscrupulous wireless resellers." The commission last year sought public comment on whether to require additional evidence of tribal residency beyond self-certification and on how providers should provide proof in order to prevent waste, fraud and abuse, said the FCC release. Blue Jay said the settlement memorializes its process for verifying subscriber self-certifications, which included building its own geo-mapping tool. "USAC concluded that this process was 'conservative to the Fund' because FCC rules require only applicant self-certification," Blue Jay said in a statement. "The settlement also allows Blue Jay to make good on a prior commitment to 'make the Fund whole.'" CEO David Wareikis said that the carrier "made the commitment to make the Fund whole because it did not want to be seen as benefiting in any way from erroneous self-certifications made by subscribers." The agreement "contains no finding or admission of wrongdoing by Blue Jay, and affirms Blue Jay's good standing" as an eligible telecom carrier, he said. "The consent decree shows that Blue Jay took voluntary proactive efforts to protect against possible fraud and would never turn a blind eye to potential fraud in the program.”
Implementing the FCC Reauthorization Act (S-2644) “would have a gross cost of $705 million over the 2017-2021 period,” offset by collected fees, the Congressional Budget Office said in a report Thursday. “Assuming that future appropriation acts allow the FCC to continue to collect such fees, CBO estimates that net discretionary spending under S. 2644 would be reduced by $23 million over the 2017-2021 period.” The extended Antideficiency Act exemption for USF in the measure “would allow the program to obligate and spend funds faster than it would without the exemption,” CBO said. The Senate Commerce Committee cleared the bipartisan legislation in April and Commerce Committee Chairman John Thune, R-S.D., told us in mid-May the hotline filing for unanimous consent consideration of the measure awaited CBO scoring (see 1605130057). But a hotline is likely to face Democratic holds due to an unrelated policy fight over the reconfirmation of FCC Commissioner Jessica Rosenworcel (see 1607010047 and 1607120075). CBO also scored the Senate version of the Securing Access to Networks in Disasters Act (S-2997), cleared by Commerce last month. It would increase FCC costs by less than $500,000, said CBO.
Community anchor institutions require next-generation Internet connectivity, said the Schools, Health & Libraries Broadband Coalition (SHLB) Wednesday, releasing an "Action Plan" to bring "gigabit-speed-and-beyond networks" to all schools, libraries, health clinics and other anchor institutions by 2020. The group released a "Vision" paper in April kicking off its effort (see 1604270022). The FCC understands the community role anchor institutions play and "is doing everything in its power" to achieve the Gbps connectivity goal by 2020, said Gigi Sohn, counselor to Chairman Tom Wheeler, in the written version of a speech she gave at an SHLB conference. She noted FCC USF subsidy actions to increase annual E-rate telecom discounts to schools and libraries to $3.9 billion, to extend Lifeline low-income support to broadband service, and to provide billions of dollars to support broadband to more than 11 million Americans in high-cost rural areas. She said requests for the USF rural healthcare program have "exploded," with demand this year expected to top $350 million, up from just over $250 million in recent years. "Anchor institutions are not just a key part of the solution to the broadband availability challenge, you are also key to the adoption challenge," Sohn said. She said many Kansas City area residents wouldn't accept free gigabit connectivity from Google Fiber because of a lack of trust: "This is where community anchor institutions come in. Successful broadband adoption programs come from the bottom up, not the top down. You are trusted members of the community who know how best to serve residents." Sohn asked the audience to help the FCC develop a digital inclusion plan to better understand non-price barriers to broadband adoption. The SHLB Action Plan includes 10 policy papers making recommendations on various issues such as broadband needs, Wi-Fi and wireless networking, broadband subsidies and broadband adoption. "The papers share three common themes: Sharing, such as aggregation and public-private partnerships that eliminate silos and reduce costs; promoting competition to incentivize growth and bring more affordable options; and, funding strategies that help communities meet up-front build-out and deployment costs, and ongoing monthly fees," a release said. The competition paper recommends requiring Connect America Fund recipients to bid on requests for proposed E-rate funding, limiting special access prices and upholding "open access and interconnection" policies.
Fiber cable and contract construction services likely will "become much more expensive or unavailable" as industry deploys new broadband facilities in coming years under various FCC programs, warned WTA, lobbying the agency on the group's petition for reconsideration of a rate-of-return USF overhaul order (see 1605250068). Representatives of the RLEC group also said FCC guidance is needed on how transactions would be handled under a new broadband model and an updated rate-of-return mechanism. "Should actual build-out costs significantly exceed the estimated costs used by the Commission to set its 5-year build-out requirement for the Rate of Return Path and its 10-year build-out requirement for the Model Path, those build-out requirements will become onerous or impossible to achieve with the applicable high-cost support," said a WTA filing posted Tuesday in docket 10-90 summarizing a meeting with Wireline Bureau officials. "WTA has requested a streamlined process for revising build-out requirements for carriers on both Paths if substantial cost increases or other materially changed circumstances render the current build-out requirements unreasonable or impossible." The group said rural telcos increasingly are concerned that "digital subscriber line ('DSL') charges, middle mile costs and customer service expenses" are hindering their ability to certify that they satisfy the FCC's "reasonably comparable rate benchmarks for broadband service." Entities seeking a reduction in an ILEC's Connect America Fund support should be required to offer the same broadband speeds and comply with the same service duties, said WTA. It said members don't expect to receive support where cable companies offer equivalent service but have concerns about "questionable claims" by wireless ISPs.
Price-cap telcos said the FCC violated the law by refusing to give them relief from legacy USF voice duties in areas where they don't receive new broadband-oriented Connect America Fund support. AT&T and CenturyLink, joined by intervenor USTelecom, Tuesday filed their opening brief to the U.S. Court of Appeals for the D.C. Circuit, which is reviewing their challenges to 2014 and 2015 FCC orders (AT&T, CenturyLink v. FCC, No. 15-1038 and consolidated cases) (see 1601110036 and 1602050029). "The Communications Act requires the FCC to adhere to a basic principle: a carrier required to provide services in high-cost areas must receive support in the form of sufficient payments from a universal service fund. The FCC orders under review violate this principle," the telco brief said. "By the FCC’s own calculation, Petitioners and other carriers face more than $1 billion in annual unfunded mandates under the FCC’s orders." The telcos said Section 214(e)(1)(A) requires USF eligible telecom carriers (ETCs) to provide services that “are supported” by universal service funding. But the FCC rule "leaves in place statewide price cap carrier ETC designations that require those carriers to provide service in high-cost areas where the required services are not ‘supported’ by high-cost funds," their brief said. "Those obligations violate the straightforward text of § 214(e)(1)(A). Likewise, requiring that service be provided in high-cost areas without supporting it with disbursements from the Fund violates the statutory command in 47 U.S.C.§ 254(b)(5) and (e) that funding be ‘sufficient’ to advance universal service. The Act also requires States to designate ‘service area[s]’ for price cap carrier ETCs that are linked to the FCC’s 'universal service obligations and support mechanisms.' 47 U.S.C. § 214(e)(5) (emphasis added). Legacy statewide service areas violate this requirement because they are a product of the replaced ‘support mechanisms’ and bear no relationship to the targeted funding mechanism that now determines high-cost support." They also said the FCC violated "the principle of competitive neutrality" and the Administrative Procedure Act. The FCC/DOJ brief is due Sept. 2 (see 1606010042).
A bipartisan group of 28 senators asked the FCC to update the USF Mobility Fund. “USF should support mobile broadband at a minimum of today’s level to close the coverage gap while preserving existing service,” said the letter dated Monday, led by Communications Subcommittee Chairman Roger Wicker, R-Miss., and Joe Manchin, D-W.Va. “We ask you to give special attention as you work to establish Phase II of the USF’s Mobility Fund (MF). Given the importance of mobile services today, the MF should be retained and updated to ensure that funding will promote new mobile broadband deployment in unserved rural and agricultural areas and preserve and upgrade mobile broadband where it is currently available. Importantly, the FCC must rely on realistic measurements of network experience on the ground to determine areas to support.” Competitive Carriers Association President Steve Berry lauded the letter. “USF must provide sufficient and predictable support to preserve and expand mobile broadband networks to meet consumers’ growing demand for wireless services and to ensure high-speed mobile broadband is readily available for subscribers, regardless of location,” Berry said. “As the FCC works to establish Phase II of USF’s Mobility Fund, CCA encourages the Commission to continue to make preserving and expanding mobile broadband in rural areas a top priority. I totally agree with the Senators on the importance of broadband for agriculture connectivity as well as economic, educational, health care, public safety, and social connectivity.”